Crude oil futures in the June contract are trading below their 20 and 100 day moving average as I have been sitting on the sidelines for the last several months in this market but if have a long futures position I would continue place your stop loss above the 10 day low which stands at 56.00 however in my opinion I think prices have topped out.
Strong demand and a very weak U.S dollar have pushed crude oil prices up from a contract low around $46 a barrel to around $63 in Wednesdays trade which has been a remarkable rally in my opinion but I think this market is overextended so I’m still going to remain sitting on the sidelines waiting for better chart structure to develop as this market will remain volatile for the rest of 2015 in my opinion giving you many trading opportunities.
Many of the commodity markets rallied in recent weeks as the U.S dollar is hitting a 3 month low which has been very supportive, however with record supplies overhanging that should keep a lid on prices at this point in time but I just don’t know where short term prices are headed so I’m looking at other markets that are beginning to trend.
Trend: Higher
Chart Structure: Solid
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Gold futures settled last Friday at 1,174 an ounce while currently trading at 1,185 in a relatively quiet trading week while still trading below its 20 and 100 day moving average continuing its lower to choppy trend as the true breakout does not occur on the upside until 1,225 is broken or on the downside at 1,170 as I remain neutral at the current time.
The chart structure is starting to improve as gold prices have gone sideways for the last six weeks consolidating the recent down move as the U.S dollar is hitting a three month low and has been supporting gold and silver in recent weeks so be patient and keep an eye on this market at the current time. The monthly unemployment came out strong stating that the unemployment rate is 5.4% sending the stock market sharply higher as I’m surprised that gold futures are not lower this afternoon as the interest rates in the United States have been on the rise sending volatility into the commodity markets as I still see no reason to own gold at the current time but currently this market is stuck in a consolidation and in my opinion it’s very difficult to make money when a trend is not in sight.
Trend: Mixed
Chart Structure: Improving
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Coffee futures in the July contract are higher by 300 points this Friday afternoon currently trading at 134.70 a pound after settling last Friday at 134.20 in a very nonvolatile trading week. I have been recommending a short position when prices broke 135 in last week’s trade and if you took that recommendation place your stop loss above the 10 day high which currently stands at 144 risking around 1000 points or $3,800 per contract plus slippage and commission.
The chart structure will improve dramatically next week helping lower monetary risk as prices are still trading below their 20 and 100 day moving average telling you that the trend is to the downside as big production could come out of Brazil which could send prices in my opinion as low as 100 a pound as the Brazilian Real has strengthened against the U.S dollar in recent weeks, but still remains in a long-term bear market which is negative for anything grown in Brazil.
The next level of support is Wednesdays low around 130 as many of the soft commodities were higher this Friday afternoon so continue to play this to the downside in my opinion as I think the risk/reward is in your favor.
Trend: Lower
Chart Structure: Excellent
This Chart Must Be Broken Before a Bear Market Can Be Confirmed
Corn futures in the December contract are trading below their 20 and 100 day moving average after settling last Friday in Chicago at 3.80 a bushel while currently trading at 3.79 down slightly for the trading week as 55% of the crop has already been planted with expectations for this Monday’s crop report as high as 85% as the weather in the Midwestern part of the United States is excellent and especially in the state of Illinois. I have been recommending a short position when corn prices broke 3.95 a bushel and if you took that trade place your stop loss above the 10 day high which currently stands at 3.87 risking around $.8 or $400 from today’s price level plus slippage and commission as the chart structure remains outstanding.
Expectations of this year’s crop are around 13.6 billion bushels which is 500 million bushels less than last year, however carry over levels are very large coupled with a strengthening dollar compared to last year as I still remain bearish especially as the weather remains ideal, however it’s an extremely long growing season as we usually do get some type of weather scare to the upside due to hot and dry weather forecasts, however the trend is your friend and the weather forecasts are bearish.
Traders await next week’s USDA crop report which definitely can send volatility back into this market but weather is the main focus at this time as we head into the hot and dry summer season which can send volatility into this market as we suffered a drought in 2012 sending prices to a record high of around $8.50 so make sure you place the proper amount of contracts while also placing the proper stop loss.
Trend: Lower
Chart Structure: Excellent
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